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February 15, 2007

Leading Muni-Fi Consultant Unloads on Lefties

Privacy advocates ask more of new Wi-Fi networks than of incumbents: Greg Richardson is the usually poised head of Civitium, the firm that has written many of the requests for proposals (RFPs) used by municipalities around the US and internationally that solicit bids for companies to build, typically at the companies' expense, metropolitan-scale Wi-Fi and wireless networks. San Francisco has made him lose his cool towards what he describes as "the far-left viewpoints being expressed by the ACLU (on electronic consumer privacy) and ILSR (on public ownership)" (that's the Institute for Local Self-Reliance).

Richardson points out that the far-right opinions initially dominated the debate over whether cities should get into the business of building broadband networks. These "far-right" opinions were largely, but not entirely, issued by organizations that either didn't reveal their funding but are known to be sock puppets of incumbent interests, or those that did disclose their funding, which included incumbents.

In San Francisco, the left-leaning elements have come into play in a way that Richardson thinks is outrageously unfair. In this case, however, there's no allegation of filthy lucre; it's pure ideology. The opposite of a sock puppet, which appears to have no witty name.

Civitium built the San Francisco RFP, and has apparently been involved in the negotiations, so Richardson is in a position to know what horse trading took place. He argues on the privacy side that not only does EarthLink's agreement offer more protection than any similar agreement anywhere else, but that the incumbents in SF aren't subject to anything like the protections that EarthLink will offer. (There are differences, of course, in what you can track on a Wi-Fi network versus a home broadband connection, but cellular data networks have much in common in terms of privacy given up.)

Richardson says that the EarthLink agreement with SF allows for additional privacy standards to be applied but only a non-discriminatory basis against "all similarly situated providers of broadband service." So why just pick on the new guy? Why not make AT&T and others toe the line, too? "What was the Board doing about electronic consumer privacy in San Francisco before the EarthLink agreement was delivered to them?" Richardson asks.

On public ownership, Richardson paints the folks at ILSR as, more or less, socialists, wanting public ownership and the public realization of potential profits. The conservative side of the debate has often focused on whether public bodies should bear the risk and, when successful, reap the reward of public ownership of facilities typically handled in a marketplace. The liberal side usually expects that public ownership produces more egalitarian access to any given facility (quality schools, broadband, bus service, etc.), and that so-called profit represents market inefficiency for a basic service that should, in fact, be conserved for taxpayers (in the form of less taxation) or government (in the form of greater resources to achieve more).

I don't pretend to be an economist, but I do know that I would prefer that cities hire companies that have the expertise to build networks of this scale, and conserve as much risk in these early stages as possible. One example ILSR widely cites is St. Louis Park, Minn., which hired private firms to build a public network that will be fully owned by the city. Or St. Cloud, Flor., which has a free network built and owned by the city. For smaller towns, especially those that might lag in broadband adoption, city-owned networks have less risk and lower overall cost and complexity. There are good cases to be made for cities of a few tens of thousands to take the matter in their own hands because they're increasingly unlikely to find a firm with substantial experience willing to take the risk for a small population of users.

Public ownership is usually recommended when there's a large civic benefit that can be quantified and understood, and where private partners are either unavailable or unwilling to participate in sharing risk. The fiber-optic project that San Francisco's Board of Supervisors promotes is an interesting case in point, and reminds me of the big "risk" that Tacoma Power took in building their Click Network. I cite Click all the time, because while the network showed up in many sock-puppet and non-funded reports arguing against muni ownership, it's actually a big success.

Tacoma Power needed to upgrade their electrical grid, and could have justified building out a fiber-optic network practically without any resale of broadband. In the mid-1990s, when the plan was hatched, it took 18 months to get a new phone line in Tacoma, and the incumbent telco and cable operator had no plans for upgrades. The power utility also expected deregulation would force them into financial straits. Thus, the perfect storm: They needed a new, competitive business; the city needed better telecom and data infrastructure; and the grid needed "smarts."

Finding that perfect storm for Wi-Fi in today's climate is much more difficult.

I can't argue that EarthLink's deal with any city is perfect, nor any of the major Wi-Fi operators deals are perfect. The question is always--what is a city giving up by going into a long-term arrangement that is essentially a franchise in that the likelihood of competing networks with similar characteristics become practically zero when a municipally authorized network is built?

Richardson's rant is a good read, and I'll be curious as to the fallout.

My parting remark? New York has been trying to put in automated, self-cleaning toilets for well over a decade, with firms vying for the opportunity to install these rest facilities with lucrative advertising paying the cost. Wrangling over fine details, massive changes in plans, and special interest groups have led to one result: No toilets. In the meantime, other "hotspot" public toilets have sprung up paid by business improvement districts, private enterprise, or specific transportation authorities. Sound familiar?

4 Comments

Two points. First, both Saint Louis Park and Saint Cloud's networks are managed by private companies (Unplugged Cities and HP, respectively) - a good way to balance public and private strengths. I'm not sure if Saint Cloud's network was built by the city or a contractor, but whoever it was did a great job - it's the #1 network in Novarum's reliability assessment.

Second, it's not as if San Francisco is letting the perfect be the enemy of the good. There was a response to the City's RFP that would have made most of the current critics much happier - but it was rejected apparently because it would have required public money. The authors of that response went on to pitch their bid in another place that was more receptive - Silicon Valley.

Glenn, as always, I find your views on these difficult issues to be balanced and level-headed. As my post argued, the industry needs more of that.

I am compelled to point out that Civitium has been an outspoken advocate for the right of public ownership since we were founded. As many of your readers know, Dianah and I were smack in the middle of the Pennsylvania-Verizon debacle in 2004, which sparked much of the debate that's still occurring today.

The difference is that we don't believe that municipal broadband is a nail and public ownership is the only hammer. We don't prescribe public ownership on the basis of any ideological belief. We don't recommend abandoning commercial service providers (incumbent or competitive ones) by proposing that the role of the private sector will be "systems integrators for public owned networks." We think that combining the strength of the public, private and nonprofit sectors (in whatever roles they may play) is where the real promise is. In some cases public ownership is the best, if not only way forward. In other cases, not so much.

I testified at a SF Board hearing back in June of 2006 on this issue, and attempted to outline certain considerations that cities might use to decide if and when public ownership was most appropriate. I will post that testimony as a follow-up in the event that it may be of interest to readers. It helps in understanding how Civitium could be supportive of private-ownership of Wi-Fi, but public-ownership of fiber in SF.

Finally, I want to make it clear that I did not refer to the left-leaning arguments as "outrageously unfair." They are as fair as any other arguments, whether I agree with them or not. I said they were (i) being advanced out of context of the goals for the project and strength of the agreement and (ii) damaging to the promise that public broadband holds. That's an important distinction.

Far from seeing public ownership as a hammer, I see it as a versatile tool that can sometimes, but not always, be used in support of community goals.

And despite claims to the contrary, the Institute for Local Self-Reliance is a strong supporter of private enterprise. In the area of municipal broadband, we support open, carrier-neutral networks that provide a level playing field for all potential private service providers, including independent local companies.

Anyone who is interested in understanding what ILSR means by "local self-reliance" is encouraged to read this marvelous recent piece, written by one of ILSR's founders, in the current issue of "In Character":http://www.incharacter.org/article.php?article=91#

So, from the comments from ILSR below, they appear to support the public-private partnership that the City of San Francisco has advanced? They say:

"In the area of municipal broadband, we support open, carrier-neutral networks that provide a level playing field for all potential private service providers, including independent local companies."

- The agreement the City has struck is open and non-exclusive; there is nothing that would prohibit any other provider from deploying similar facilities. The agreement is carrier-neutral - in the sense that EarthLink is require to open their facilities to other operators (unless ILSR is suggesting that carrier-neutral requires that the City or a "neutral host" own the facilities." The agreement supports a level-playing field, in the sense that any retail provider (whether national or local) can purchase and resell service on terms that are non-discriminatory.

As a side-note, if ILSR is saying that carrier neutral means "neutral host" that would be an understandable position (at least I would be able to reconcile what I perceive as an inconsistency.) What I mean is that there are operators in other regions (like the model used by The Cloud in the U.K.) that I would classify as neutral-host, where the owner of the facilities does not market a retail service. While I appreciate that position, it is an unorthodox model, at least in terms of Wi-Fi in the U.S. market. I know of no private operators who have embraced a neutral-host business model, outside of a few companies in the airport Wi-Fi space.

So, try as I might, I am failing to see why ILSR has been opposed to the agreement? It seems contradictory to state that "only public ownership can guarantee.." and then promote business models like Silicon Valley where the ownership and financing characteristics still seem to be in development. Consider the following statement from IBM.

"Diana Hage, director of wireless services for IBM, says the Metro Connect project will cost at least $75 million. IBM can easily afford to make that investment up front, and wait patiently for a few years to get a return. So consumers, businesses and cities can be confident using WSV, without worrying the network might shut down tomorrow for lack of funds."

IBM make the investment? It doesn't sound as though the Silicon Value network will be a public-owned asset, and again I find inconsistency in ILSR's positions.

If you follow my logic, it suggests that ILSR should rename their recent report from "Five Ways Public Ownership Solves the U.S. Broadband Problem" to Five Ways open, carrier-neutral networks that provide a level playing field for all potential private service providers, including independent local companies Solves the U.S. Broadband Problem?" Sorry to nit-pick, but the state of broadband in the U.S. is a rather important topic.